The article explores how interest rates and exchange rates interact in different countries. They found that when interest rates are higher in a country, its currency is expected to depreciate. However, this depreciation doesn't always fully offset the interest rate differences, leading to deviations. In the short term, expected depreciation can mostly offset interest rate differences, especially in advanced economies. But in the long term, factors like currency risk and capital outflows from emerging markets can prevent this offsetting, causing larger deviations. In bad times, currencies in advanced economies depreciate more than expected due to higher global risk, while in emerging markets, capital outflows lead to larger interest rate differences.